Pub group not covered for loss of business due to Covid-19

The chain is advising its publicans to source additional insurance as losses are not covered under its group policy

Pub portfolio management organisation Ei Group has advised its publicans to source additional business insurance, as the firm’s existing group policy will not cover loss of business due to coronavirus, reported The Guardian.

Ei Group, which operates a portfolio of 4,000 pubs, is insured with Zurich.

A letter sent to Ei Group’s publicans last week, which was seen by The Guardian, stated: “It has been confirmed that Zurich is not including Covid-19 in its notifiable diseases section. As such, any business affected by Covid-19 will not be able to claim for loss of trade.”

Lack of cover

Earlier this month, the government classified Covid-19 as a notifiable disease – this is a formal statutory process for monitoring infectious diseases. However, certain insurance policies do not cover losses arising from notifiable diseases, or losses associated with illnesses that are not specifically listed within policy wordings.

This distinction to policy small print came about after the 2003 SARS outbreak, when Aviva sought to clarify what was, or wasn’t, covered under its BI insurance.

An Aviva spokesperson explained: ”For the significant majority of Aviva business interruption policies, our cover is based on a specified list of diseases and has been since the SARS outbreak in 2003.

“These policies exclude business interruption due to new and emerging diseases, like the coronavirus. Our policy wording clearly identifies the diseases we offer cover for and also highlights that new and emerging diseases are not covered.

“The reason we do not provide cover for new diseases like coronavirus is that we can only underwrite against known and specified diseases – we cannot model for risks where the losses are an unknown quantity. Coronavirus is a novel disease and was completely unknown, and therefore impossible to quantify.

“Business interruption losses stemming from the current coronavirus outbreak are therefore not covered under the significant majority of business interruption policies.”

Human impact

The end result here is that publicans are likely to take a financial hit.

Viv English, who runs the Lansdown Arms in Sussex, told The Guardian: “We have no Premier League games and maybe a 20% to 30% hit on trade. I have been paying into the policy for almost 20 years, it is compulsory for us to have it [as an Ei tenant] and it is going to let us down just when we need it.

“We’re going to take a real hit and I already know I can’t pay my VAT bill.”

An ABI spokesperson added: “A small number of businesses may have cover in place that will specifically provide for business interruption arising from notifiable diseases. However, this type of extension is not commonly included as standard.

“Standard business insurance policies are designed and priced to cover standard risks and are therefore unlikely to provide cover for the effects of global pandemics like Covid-19.”

Ei Group declined to comment further on its insurance situation, while rival chain Wetherspoon also declined to comment on whether it was experiencing a similar situation.

A spokesperson at Zurich told The Guardian: “Zurich’s cover for business interruption is fully aligned with the rest of the insurance market.

“We will always respond whenever one of our policies is triggered and are continuing to support our customers on a case-by-case basis.”